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Canadians pay less, get more and get it faster

01 Apr

The highly technical and detailed pricing models that Canada’s communications companies present to the Canadian Radio-television and Telecommunications Commission (CRTC) for regulatory approval rarely make headlines.

However, the recent intense debate around Internet pricing, and the ways Canada must deal with increasing Internet traffic and resulting congestion, have put these sometimes mundane technical efforts on the front pages.

On Monday, Bell asked the Canadian Radio-television and Telecommunications Commission (CRTC) to implement a new pricing model for wholesale Internet services called aggregated volume pricing, or AVP.

AVP enables third-party Internet service providers (ISPs) to purchase network capacity in bulk based on overall usage, rather than on a per-customer basis, giving them flexibility to offer service packages based on their own business objectives.

Third-party ISPs would pay a monthly access fee and a volume rate. Access fees would vary by speed, but the same volume rate of $200 per terabyte (about 19.5¢ per gigabyte) would apply to all service speeds. Additional charges of 29.5¢ per gigabyte would apply if overall monthly usage exceeds forecast levels.

Many third-party ISPs, including Acanac, Execulink, Primus, Yak and the Canadian Association of Internet Providers itself, have in the past advocated for AVP at the CRTC. Most would see no change in the overall cost of their existing services, only in how they are billed.

Flexible, predictable and transparent, AVP maintains the fundamental principle that those who use less network capacity do not have to subsidize those that use the most. It also enables Bell to move forward with billions of dollars in investments to increase and improve broadband capacity – investments that are needed if Canadians are going to continue to be world leaders in Internet usage.

And we are world leaders. At the risk of undermining the arguments of those for whom the grass is always greener somewhere else, here are a few facts about the state of the Internet in Canada that are worth noting.

Canadian wireline broadband prices compare favourably with those of the digital economies with which we compete. Average prices in Canadian dollars across the range of speeds and bandwidth are lower in Canada than in, for example, the United States, Japan, France and Australia. Moreover, according to the CRTC, the average price per megabyte per second has actually fallen as both consumption and speeds have increased.

According to Akamai, which uses its global server network and the billions of requests it receives daily for Web content to test actual rather than advertised download speeds, Canadian ISPs are offering speeds as fast or faster than every G8 or G20 country, with the notable exceptions of South Korea and Japan. Notable because, unlike here in Canada, the geography and population density of those two countries provide very favourable network investment conditions.

So Canadians are paying less and getting more, and getting it faster.

All this has been achieved with private capital. Canadian telecom and cable companies have invested tens of billions of dollars in the last decade in building Canada’s state-of-the-art high speed networks. Bell itself undertakes capital investments of approximately $3-billion each year, building and enhancing the digital infrastructure that supports Canada’s economy.

We’ve all heard the statistic that Canadians watch more hours of YouTube video streaming each month than anyone else in the world. Bell has seen traffic grow by more than 30% in each of the last two years, and double that in peak periods. Even with the investments Bell has made, that kind of growth in traffic inevitably leads to congestion, leading to slower speeds and dropped data.

It has taken the better part of two years’ worth of CRTC proceedings to get us to today, with more to come, during which every interested party has had and will have the chance to make its case for a new approach to wholesale Internet pricing.

Many small and independent ISPs have argued for aggregated volume pricing, and Bell now agrees with them that it’s the right approach.

Canada’s free and open society is the envy of the world. Our communications industry is a key component of that and Canadians make tremendous use of the tools it offers to create, innovate and debate. Let’s celebrate that, while recognizing the ongoing investments that will be required to continue to ensure it remains a reality.

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9 Comments

Posted by on April 1, 2011 in tomfoolery

 

9 responses to “Canadians pay less, get more and get it faster

  1. Nicolas

    April 1, 2011 at 6:40 am

    Nice April’s Fool. Made me smile 🙂

     
  2. Rui

    April 1, 2011 at 8:48 am

    whew… you had me going there for a second. I almost thought your were siding with Bibic’s articles in the National Post 😛

     
  3. Myles

    April 1, 2011 at 8:51 am

    Holy smokes, you have lost your mind!

    Good think it’s April Fool’s day. Perhaps you will also join the new Canadian federal political party, Sage, for seniors. Oops, that was an April Fool’s joke too.

     
  4. Chris

    April 1, 2011 at 9:45 am

    Man, you almost got me there, what a mind job! To those who still think you can’t write: you have no idea what you are talking about!

     
  5. Dale Dietrich

    April 1, 2011 at 10:34 am

    This piece was written by Mirko Bibicm a senior vice-president, regulatory and government affairs, for Bell Canada. I laughed at it as being complete bunk when I first read it in the Financial Post yesterday here:

    http://opinion.financialpost.com/2011/03/30/bell-now-agrees-with-small-isps/

    I wondered for a second why Peter, of all people, would be replicating it here until a paragraph or two in when I remembered it was April 1.

    Good one! 🙂

     
  6. Torontoworker

    April 1, 2011 at 10:51 am

    I have to clean my monitor – there is coffee all over it! I hate April 1st, I really do.

     
  7. Chris

    April 1, 2011 at 2:09 pm

    Man, what a mind job this is… With words so well crafted, no wonder the regulators are completely fooled, and reading this piece, I am seriously concerned they are going to go for it: We all know how little they know about the way the Internet operates (“How many gigahertz of capacity does anyone need?”)!

    In any case, your presentation is interesting as it brings a fresh perspective to the issues: In other words, not knowing who wrote this piece or thinking it came from someone you agree with stimulates one to look at it more objectively, as I would expect the CRTC, as a supposedly independent body, to act.

    So I urge the regulator to remember his duty to look at this objectively and ask the following questions in response to the author’s argument:

    1 – Please justify the claim that 19.5 cents per gigabyte is reasonable for wholesale pricing, when there is ample evidence that cost is in the ballpark of a few pennies, and dropping. How is the 19.5 cents figure justified in regards to return on investment and cost for network upgrades required to relieve the congestion you are claiming, and the costs incurred by you to service your wholesale customers’ usage.
    2 – Please justify the extra 10 cents per gigabyte for overages past “an agreed monthly capacity”. What costs are incurred by you when a wholesale customer exceeds the agreed on capacity. May I remind you that we have evidence that cost of transport per gigabyte is dropping, not increasing.
    3 – I understand price increases may be necessary for network improvement. Please breakdown the figures to show how price increases would be applied to finance network improvement, and what part is profit.
    4 – Please explain how you there can be such a problem with capacity and congestion requiring increases in your rates when, according to you, we have one of the best Internet in the G8, and how you can justify an increase for usage when you yourself have admitted that costs for this capacity has actually decreased?

     
  8. Angie Pants

    April 2, 2011 at 12:03 pm

    I live in China and it’s currently April 3rd for me. I couldn’t believe what I was reading until I got to the comments section.

    I just got April Fool’s-ed by a time change.

     
  9. Tan

    April 2, 2011 at 3:04 pm

    So this is satire to “Canadians pay more, get less, and get it slower” right? Otherwise, check your butt, I think Bell’s and Rogers’ hands up there.

     
 
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